Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Mark Guinan - Executive Vice President and CFO

Andy Rieth - Vice President, Investor Relations

Analysts

Matthew Dodds - Citigroup

Hill-Rom Holdings, Inc. (HRC) 2013 Citi Global Healthcare Conference Transcript February 26, 2013 2:15 PM ET

Matthew Dodds - Citigroup

It’s Matthew Dodds with Citigroup, and I’m pleased to introduce next Hill-Rom. We have with us Mark Guinan, who is the Executive Vice President and Chief Financial Officer; and Andy Rieth, who is Vice President of Investor Relations.

On Hill-Rom, I don’t cover, but they have made a nice recovery to start 2013. The fiscal first quarter results were ahead of expectations and stock is up 14% year-to-date, which is about two times the med tech average, so off to a very good start.

Mark’s got a few short slides and then it’s largely going to be Q&A, which again, I encourage participation. We have got a lot of question for him. So, with that, thank you and Mark go ahead.

Mark Guinan

Thanks Matt. Appreciate it. Good afternoon to everybody. Just going to spend a couple minutes familiarizing some of you who may not be, let’s call the Hill-Rom story. Before I get into that just want to give you the usual cautions about our forward-looking statements and I’ll refer you to our 10-K and our recent Q in terms of some of the risk factors that could impact some of our future results.

So Hill-Rom again for those of you who aren’t as familiar with our company, we are really a global leader in medical technology across the care continuum, which means from acute setting into the post-acute setting either an extensive care facilities or even in the home.

We have a patient handling business which as most people are familiar with. It’s our bed business basically what we call our frames and surfaces, so high-tech ICU and Med Surg offering that we sell through hospitals. We’ve got a mobility business or basically lift, patient lift litho. We also have two niche businesses, we call patient environment which is our architectural products and also furniture.

Those of you who are close to, I’m sure, recognize that we recently made a significant acquisition of Aspen Surgical Medical, which is in the area of patients and caregiver safety and infection control. Most notable brand probably within the Aspen business is a Bard-Parker, scalpel and blade products.

We also have had a legacy product in the surgical area, our Allen Medical, which has patients positioning devices to go in the OR for typically for arthroscopic surgery. And importantly, we are really focused on outcome. So as we talk to our customers, the framing for our products that we help them with the solutions they are looking for in terms of controlling costs and driving improved outcome for the patients but also for the caregivers.

For our bed business, we have an 80-year history. Certainly, market leading innovator. It’s a great brand that have lot of recognition hospital especially with nursing staff, most recent fiscal year we’re $1.6 billion.

And then we do have a couple different revenue models, capital sales, about half of our business we also have rental and we have service revenue, and to be clear the rental is not a lease versus buy or it’s a same products, financing decision is up to our customers. It’s really largely specialized products or some products that need hospitals fees during times of peak demand.

And then finally, we have a solid international footprint from which to grow is still heavily in North America, but we have a solid footprint and we’ve been expanding it.

A couple of things I point out in terms of recent achievements. We did complete two significant acquisitions in the last 12 months. One of those is the Volker bed business in Germany. It’s a high-quality well-recognized bed business in a market where we relatively underdeveloped in terms of some of our presence in the key European markets. And then of course, the Aspen Surgical Medical business, which I referenced a minute ago, which is focused on both at Bard-Parker business but also infection control and some specialty needles.

Over the last several years, from 2009 to 2012 we had shown significant progress in improving our operating margins. You can say about 470 points. As I mentioned, strong footprint in basis to build our international business and we have grown that to over third, aided by some of the recent acquisitions.

And John has spent his first couple years. John Greisch within the company putting together very experienced set of management who has in most cases multi-national global experience but also a depth of experience within leading medical device companies.

We have been very focused on controlling our costs and a big chuck of the margin improvement obviously is in that area. We did go through a significant restructuring nine months ago, eliminated over 400 positions as you can see and we actually got our SG&A as a percent of sales below 30%, which in our long range plan about two years ago was in target, we have set a little further in the future, so we actually accelerated our achievement.

We have been returning a significant amount of our cash to our shareholders, you can see there $159 million over that two year period of time and we’ve also increased a dividend 22% over the past years. So this is a very strong cash generating business and while there certainly is some as we call lumpiness on the topline and on the EPS, there is a less of that on the cash flow. It’s actually much more smooth and scalable.

And then finally, I point out that our adjusted EBITDA in 2012 despite the fact that earnings were down slightly versus 2011 was actually record at $324 million.

A couple of things I’d like you to take away from listening to the presentation today is that despite this challenging external environment, both between the European austerity and some of the movement in the capital markets in North America.

We still have a strong inconsistent cash flow, the diversification of our business. So while we do have a large bed business between our lift, between raspatory business, our surgical businesses. And then also as I mentioned the surgical positioning and architectural products and furniture, we do have a diversity of products, which certainly help us to maintain that cash flow.

We’ve talked about six areas of strategic focus for the last two years and we stayed adherence to that. Those are around things like leveraging our channel, focusing on innovation, M&A, which we’ve talked about quite a bit in our capital allocation strategy, also financial excellence, people excellence and then finally, expanding our geographical footprint.

Our key value proposition is really focus, as I said earlier around improving patient outcomes and improving operating expenses for our customers and really our clinical expertise, and our focus on patient safety, are things that we can demonstrate to our customers in terms of return -- actual return on investment.

I mentioned the capital allocation strategy, we put that out of the investor conference two years ago in May. We’ve continued to talk about that. Importantly, we’ve actually spent at a lower end of our capital allocation where we said internal capital will be 25% to 35% and we’ve exceeded the 15% to 20% that we talked about returning cash to our shareholders in the short-term. And then finally, as I mentioned before, we have very experienced management team.

So that’s all I had in terms of prepared remarks. So with that, I’ll go back to Matt for the Q&A. Thank you.

Question-and-Answer Session

Matthew Dodds - Citigroup

Okay. So I was trying to do my homework over the weekend and I read a lot of notes, and there were two areas, I felt there was, I would call it a controversy around the results or the expectations, and the first was on the gross margin. It looks like the gross margin came in below a lot of street expectations? And you are still shooting for 47% for the year and some of the street doesn’t think you can kind of show that sequential improvement. So, I guess, my question would have been right on the call? Why are you confident that you can, what is that they can get to up from the current percent you just delivered?

Mark Guinan

Good question. I appreciate the question. I repeat some of the comments I made on the earnings call. If you look at our gross margin from 2011 and 2012, we decline several 100 basis points and it was really mix driven. So its not as if we are having either pricing pressure or some sort of cost issues come out is been pretty much flat really haven’t driven a year.

We’ve been delivering on what we call our taxable cost out projects. So like-to-like apples-and-apples gross margin is either pretty stable or actually up slightly with one exception and that is the rental business. So rental business has been under some pressure as the revenues have declined and we, although, we’ve been adjusting our infrastructure with that, we still had a little bit of deleveraging and certainly we talked about some of that in the first quarter.

So, really what it’s been is a question of mix and in the first quarter, we had a very different portfolio than we had in the prior year. And where that was different, was the rental capital mix was significantly different where rental was a lower proportion of the enterprise revenue and there was a significant gross margin differential between those two businesses. The geographical allotment around international versus North America was more heavily skewed towards international and that has a lower gross margin than North America.

And then finally within the product categories, some of the higher gross margin products where a lower mix of our total revenues, most pronouncedly ICU business and our Med/Surg business. So it’s really a mix issue and so as we look at the balance of the year, we talked about the fact that international and that will make up prior to the portion of our business and there is a number of other mix things we see, including as we talked about Q4 being more along our historical norms where we have our strongest quarter of the year in Q4 and where that’s really driven is out of North America. And that is the business that has the highest gross margins.

So those together with some cost-out projects that are been implemented right now, that are going to give us benefits in the future quarters is a reason now that we have confidence and we can guide them to that gross margin will be improving as we go throughout the year.

Matthew Dodds - Citigroup

Okay. Then the second one was, I would call just broadly on CapEx purchasing. There seem to be despaired views on the U.S. market. There is a lot of surveys that’s been out. We did one and it wasn’t mine. It was Gary Taylor’s. It shows -- it didn’t show a negative environment but it shows in his survey, a less robust environment than a year before in terms of the growth rate.

But there has been some surveys that have shown better results. But it seems to me, they are all over the place in terms of in terms of what the surveys are. What gives you the confidence is it, when you start a new year is there some visibility? I know you have, you start that order rate, improving order rates sequentially. You’re your -- what’s Hill-Rom’s take on the capital equipment purchase environment in the U.S. so far in 2013?

Mark Guinan

So commenting through the first quarter, I think the theme we try to emphasize was stability, so not some sort of inflection points in capital. I think that was important in terms of size of that because if we had guided and delivered a Q4, that was out of some of a historical norm. We didn’t see it spike up in Q4 2012. And if you look out over the last decade, it was only two years where we didn’t see that, 2012 being one of those. So, I think there was a fair amount of concern that that we were on a downward projection. And so, I think the fact we could come back and show us Q1 where orders were actually up year-over-year, slightly backlog was improved.

But really what we said was, hey, over the last four quarters it’s been pretty consistent level of orders. So it’s not a step change direction either up or down, it’s really been stable. So it’s probably to your point about there being different points of view about up or down, it’s probably the average. We are seeing, it’s kind of raising north.

Matthew Dodds - Citigroup

So there is survey, there is amount. So how much visibility you have kind of at the start of the year? Is that simplistically some of these hospital purchases in their budget? Do you have a better sense of Jan 1, or is it kind of just off of the year that can change?

Mark Guinan

Yeah. So, I mean the visibility that we have is like other capital equipment companies because we have a funnel in potential orders. It’s typically a fairly long process from the time that you are starting to talk to our customer that, so let’s take with that business, for instance about replacing out some of the beds or upgrading them. And so you’ve got a funnel with potential deals and you compare that to historical norms and you kind of probably weigh things and you come up with your expectations for the year.

Certainly in the next quarter, we’ve got a lot of visibility. We come into that quarter with backlog, which were actually orders in hand and then there is a number of other projected orders that are as very close to being enhanced. So we feel that within days or weeks, we certainly are getting those orders. We have a high degree of confidence. And one of the reasons we move to quarterly guidance about a year ago was, we wanted to be as transparent as possible and we felt and we wanted to control some of that volatility.

Two quarters out, a little bit less so in terms of not a lot of the backlog, it’s the shipments two quarters out no specific ships in the next quarter. But certainly we are in the process of that point of RFPs and so. For instance, we know, pretty well where customers are getting serious about potentially placing an order. And then beyond that it’s more of a, hey, we got capital budgeted. Potentially, we are thinking about replacement of couple of hundred beds but you are still ways away from giving that purchase order in hand.

Andy Rieth

And I will just add to that by saying, I don’t think that there is any particular point in a year where hospital customers have any more visibility at one point than another. They obviously are on, typically some kind of an annual cycle. Those annual cycles vary by fiscal year, so they are spread out all across the year and they're basically making a decision to pull the trigger against that capital plan as they move throughout the years. So it’s not that there is any point in time where we necessarily will have more visibility than another is kind of on a rolling basis.

Matthew Dodds - Citigroup

I’m going to extrapolate that figure up. Is their view there is stable in calendar ’13 versus calendar ’12, as you look across you different businesses in Europe?

Mark Guinan

Yeah. As we commented before, I’d call it stable but declining. So it’s not, again projection does not change dramatically. We’ve experienced actually for the last couple years about eight quarters of fairly stable weak order rates in Western Europe, which means low single digit declines. So it’s not falling off a cliff, but certainly it’s not growing, it’s declining slightly.

Matthew Dodds - Citigroup

And I guess just broadly, we could start with Europe. I mean, what is your assumption on the competitive share dynamics? Is that involving market, where do you think that you’ve lost little share in Europe?

Mark Guinan

Our sense is that it was very competitive. We don’t think it’s attributable to share. We are pretty confident that it’s attributable to the market. Certainly, we get pretty good visibility to all the large tenders and so on. So we know where beds are being replaced, certainly when less are being purchased, essential product purchases in furniture and in surface.

And so as we look at it as, we feel very much like the market. Although -- and I don’t know the answer is any different competitively but the market is not the market. Every country has a slightly different market. Certainly the Mediterranean markets have been much tougher and those are the ones where we are less developed and where we are kind of overdeveloped in terms of France and Germany now, in the U.K. and Scandinavia, those have been little more solid.

Matthew Dodds - Citigroup

And if we shift to emerging market, you’ve made a lot of headway in emerging markets. I didn’t get -- I wish I didn’t see. What percent of sales is emerging markets? I know you’ve called that international, but do you have a rough estimate as to what emerging market is as a percentage of total?

Mark Guinan

It will be about 18% in rest of the world beyond the U.S. and Western Europe now. It includes Canada and you back Canada out, you are probably talking about 15% range or so. Canada can’t necessarily be considered an emerging market but it is a lesser level. So if you look at that as a good percentage, it doesn’t seem that you’ve made a lot of that in China, usually in net debt.

China seems to be the dominant part of emerging market. You’ve actually done relatively well in Brazil, in the Middle East. Why those markets first, why not China, what’s different, is it the way you approached it or is it that those markets are more attractive for your business?

Mark Guinan

It’s because of the market that picks itself. China, so let’s take our core patient support systems. China’s electric bed market is very small, relatively small in the tens of millions. So we have a very solid share, a good market position but it’s really at the VIP hospitals, the military hospitals et cetera, even with all the investments in healthcare you are not seeing investments in electric beds. It’s really more manual then.

So we see that opportunity now that it is still in front of us, but it’s not as if we don’t have a good share it’s just a small market there in the products which you compete. Brazil is a little more developable, most of that business is in the private setting not public setting. But we see a lot more electric beds in Brazil than we do in China, relatively the overall size as the patient population in the healthcare system.

Matthew Dodds - Citigroup

And in the Middle East, how come that one has done so well for you?

Mark Guinan

Yeah. The Middle East, as I’m sure you are aware is investing quite a bit of money in healthcare. They are looking to build for most part of new construction. This is not replacement where it is certainly in North America and Europe. Our business is replacement business. In the Middle East, the first sale has been doing construction and they are looking to replicate basically U.S. healthcare systems. In many cases, they have partnerships with some of the healthcare provider that you are all familiar with in the U.S. And they want to replicate what they have which typically is highest technology most imitated products.

Matthew Dodds - Citigroup

And then for China, just circling back a second, it’s really a discount that the opportunity is still there versus no obvious timeline whether they are going to suddenly shift to electric beds but there is no reason to suggest that overtime they wouldn’t?

Mark Guinan

Right. It’s not as if there is a trends player that taken the market into different direction. I think manual bed is very, very different than electric beds. Electric beds market hasn’t developed yet.

Matthew Dodds - Citigroup

And are there opportunities to acquire local companies in your space in emerging markets. We have seen a lot of that in China in orthopedics, cardiology. For Hill-Rom, you’ve done a lot in the U.S. and Europe but do you see players that either in your space or close adjacencies as opportunity?

Mark Guinan

As we’ve discussed our M&A strategy, one of the things we have talked about is potentially geographic expansion. As I said in China, there is just not a big electric bed markets. So what would the adjacency be or it would be, maybe a manufacturing capability in China where there is shipping of other places as well not just for the Chinese market because that would give us a footprint in China.

It could potentially be, if we thought to segue into helping to grow the electric bed market was to enter at the high end of a manual bed market. You know, it’s something certainly we look at and consider that we’re looking at anyway that we can grow especially in these markets. We’ve seen to have a lot more run rate in from of them as opposed to behind them. Yeah, we’re looking at those kind of things but it’s not as if there is an obvious developed electric bed business in any of these markets. Those markets are really at the comp.

Matthew Dodds - Citigroup

And then just talk about the manufacturing, is there a long-term opportunity to do it locally in some of these markets. Is there a value to that?

Mark Guinan

Yeah. If you have the critical math, I think the big value is our products tend to be heavy. And therefore, the freight expense is probably a bigger driver as opposed to some of the other reasons you might localize in some of the emerging markets. Preponderance of our cost of goods are material not labor. So where there might be opportunities in some markets, at least short term, they look for some labor arbitrage typically the freight expenses because of bigger consideration.

But I think the best reason for localization is really so that you can tailor your products to the local leads, and yeah, even develop products remotely and do that well. But I think sometimes it is advantage of developing locally. I mean local was a classic example. We didn’t have Germanized products. And we have a very distinctive taste for that and that’s what we got with Volker. And it’s much more attractive to the local customers.

Matthew Dodds - Citigroup

Anybody got question here.

Unidentified Analyst

Mark, on Surgical and Respiratory care with Aspen, is the integration pretty much complete in any thoughts or any color that maybe, would be some topline synergies there yet to come. And then lastly, if you hadn’t done that deal and it wasn’t in front here today, would you still do it?

Mark Guinan

Well, let me answer this last question first. Yeah, we are pleased with the Aspen acquisition. It’s pretty much run on track with what we were expecting. The large part for the integration are behind us but there is always certain things, converting benefit plans and all those kind of things but you staged for the right ways. And so everything is not done but important heavy lifting is done and certainly we’re on track in terms of utilization plan that we put together.

So we are pleased and the answer to your question, yeah, certainly we would do it again today. It’s a very attractive business. It’s got growth. It’s got margin profile that is very attractive. It’s differentiated product with our degree of brand awareness and brand loyalty with the Bard-Parker blade. So we like the assets.

Unidentified Analyst

Okay. If I can follow-on with that, that business is Surgical/Respiratory is now 15% of sales. There seems to be an affinity for you having more resourceful products out there. How much further can you go in that business? Is there a lot of room in adjacencies in what you have now to continue your acquisition strategy which can be pretty upfront about being in area that you pursue. Is there a lot more in Surgical/Respiratory with this as your base?

Mark Guinan

In terms of organic growth, are you saying in terms of platform?

Unidentified Analyst

No, in terms of -- as a platform for more acquisitions. I mean, how many -- what’s realistic adjacency for what you have today now.

Mark Guinan

One of the things, I think John has emphasized is that we would work to try to drive really more of a platform approach as oppose to disparate businesses. So I think ideally but of course, it’s going to be dependent on finding the right assets and at the right price in value creation and all that. We would look at Aspen more as starting of a platform to get more into the surgical disposable area as opposed to one-off acquisition.

So to your point, yeah, that is one of our strategies that we disclosed to spouse to try to look at that as a platform which will mean, we’re looking in that area. Now, whether, I mean, it comes to fruition or not, time will tell but it’s clearly a strategic goal for us in the M&A area.

Unidentified Analyst

And would you consider growing larger than estimates of the right acquisitions was out there?

Mark Guinan

I think we’ve said in the past and I know John has that for the right asset, we’re not afraid of taking on some debts. But obviously we wanted to walk before we ran. We wanted to take some smaller acquisitions, get some experience, improved ourselves and to you all that we could do the integration where we can create value. And then something should come up, that’s larger and it was very attractive and it’s some way something we would consider.

Unidentified Analyst

And then for Surgical/Respiratory, this might two details. Do you know, what the exposure for that emerging market. Is it below corporate average?

Mark Guinan

Well, I mean, yeah. The respiratory business is largely within the U.S. I mean, there is certainly some business within the international regions but it’s preponderantly in the U.S. The Allen business is largely U.S. with some business in Western Europe. And then the Aspen business has got a nice business certainly in the U.K. but it’s probably about proportional for the rest of the enterprise. So, one of the business is probably similar. And then two of the businesses are more skewed towards the U.S.

Unidentified Analyst

So when you talk about broad rate increasing their emerging market exposure in this area. Is it something that will take a long time or is it something you plan on ramping your distribution model or your efforts in Surgical/Respiratory?

Mark Guinan

We are doing some of it right now. I mean, certainly those products probably even more so been our core patient support system, computer markets that aren’t largely developed within some of the emerging markets. So the willingness for some of those healthcare systems to pay for our respiratory products such as our Vest is probably low today.

Hopefully, we’ll come in the future as their ability and willingness to pay for higher acuity in products increases. And then same things for our Allen business that it’s really a market that’s largely in the U.S. And it’s somewhat developed in Western Europe but that’s probably little ways away any significant. So I’m not saying we’re not marketing those products at all but to be a significant part of our business, it’s lagging behind the core patient support systems.

Unidentified Analyst

Okay. And then shifting to bed, the rental side, is there a light at the end of the tunnel for when you could stop seeing the pressure there. Is there a base level where it doesn’t make any sense that it would decline further?

Mark Guinan

All right. We’re -- of course we’re always hopeful that it will be declining. I mean light in terms of the pressures going away, I don’t think so. I mean, I think the pressures that our customers are on under right now are not things that are going to go away, all the way reimbursement pressures are under today that they anticipate in the future as we see more efforts to waiving healthcare costs, so on and so forth.

I don’t think those are going to change. Some of the rental decline though as we really believe has been capitalization of those rental businesses. So let’s take Bariatric Beds as one example. Several years ago for many/most of our customers, they didn’t have the critical math to patient flow where it would make sense to buy the big heavy large Bariatric Bed and dedicate.

These are not things you can move around terribly easily and to dedicate a room just to bariatric patients. But unfortunately for society, I think there is more and more frequency bariatric patient is showing up. So many of them who were in the past, had made sense that economically for them to rent are starting to capitalize it. I mean there is also reality of that with all the pressure on operating budgets but sometimes with temptation, there it swings little bit too a capital isn’t quite the same as operating budget, let’s get this out of our operating expenses, if we didn’t get the capital approved so.

I think there has been a little bit of that capitalization of that rental business but also we’ve talked about customers getting more efficient and a necessity. We’ve talked about that for a period of time. I do think there is an end to that because if the assets being utilized and they only pay for what is being utilized and they’re careful about that at some points at end.

So I think that inefficiency is largely behind us. But the other area is changing protocols. So it could be a lot of our therapy rental business is our high-end, highly therapeutic products like for instance our therapy surfaces and our household might time up protocols.

For example, a patient with threshold of certain size in the past was eligible for one of these particular surfaces and then in order to contain cost, we’re going to change that protocol where it announces to be larger in pressure also.

So I think looking at everything and opportunities to reduce their costs, I don’t think that’s going to go way. But as we continue to innovate -- bring new products, also we’re look to reinvigorate that rental business as well.

Unidentified Analyst

And given the infrastructure need, how much cost can you get out of that business now as it getting really hard to lower the cost along with the revenue decline?

Mark Guinan

No. And it’s largely variable cost. It’s mostly our service technician in our fleet. So our ability to prevent any sort of de-leveraging in a short period of time like a quarter is limited. But certainly over time and something because we also have the same things that would enable us to reduce cost and response to the business getting little bit smaller.

The things we’re doing even if the business was growing to try to drive efficiency. So it’s not as if we have to resync the business model and invent new things to reduce costs just to response to other business going down. We’re looking at that stuff all the time in terms of the efficiency, the utilization of those assets, the efficiency of our trucking fleet and then even the logistics of how we optimize getting assets to new hospitals in the most efficient fashion. We’ve invested a fair amount of technology in fact to that fleet as well in order to drive some of that productivity.

Andy Rieth

And just elaborate on some of the work that we have done on infrastructure is, if you go back several years, we had about 225 service centers. These are bricks-and-mortars service centre that supports that business in North America. And that numbers is now closer to 150. So these efficiencies in process, in technologies at market describing have allowed us to consolidate some of that footprint of infrastructure.

Unidentified Analyst

And then last question on rental business, are there any countries outside the U.S. that you see as potential to a doc more of the rental model than a capital model, or they are starting off the capital model?

Mark Guinan

We do have a rental business in several of European countries, so we have about 30 service centers in Europe. So there is that model. I don’t see that being some sort of a huge driver certainly in the emerging markets who are some of the countries that don’t really have a rental market. I mean, there is a lot more price pressure outside the U.S. and there is the U.S., which makes the economic difficult for anybody to go in there and set up an infrastructure and do that in and out, and so make -- even though a return on their investments. So, I wouldn’t expect that to be a big growth driver.

Unidentified Analyst

And just broadly on prices, I think we mentioned on earlier, the pricing in Europe, U.S., emerging markets some stability in some of these business or is one area worse?

Mark Guinan

I think it’s been quite stable within the capital sales and we haven’t seen dramatic cost structure there, certainly within the rental market especially in Europe, but even to some extent in the U.S. recently, more pressure on those prices.

Lot of competitors, some competitors appearing to chase volumes and sacrifice the pricing, but certainly our customers given us a strong message that we are into all sides of pressure and as a supplier, provider to us we need to go up and help us out. So, I think different capital, fairly stable prices, rental pressure.

Matthew Dodds - Citigroup

And then just one last one for me. The 483, I think there was a little bit of confusion on what happened. That was a sort of an update on the warning letter for 2012, higher in terms of efficiency. Can you say if it’s less or if there is a shale improvement or how would you categorize this 43 from what you got a year ago?

Mark Guinan

Yeah. Let me try and answer the question. So, I don’t think 483 necessarily you would show purely by definition as efficiencies.

Matthew Dodds - Citigroup

It could be less.

Mark Guinan

So what I will tell you is when these inspectors who were in October 2012, which was the year before the first 483. In October 2011, they acknowledge progress. So again, just to reconfirm we had an inspection of October 2011 where we had ample of observations, we’ve got a warning letter related to that that came out in early 2012.

We put our remediation plans together that obviously has been reviewed and approved by the FDA. We are progressing against that remediation plan and there was nothing either driving that inspection we had in October 2012, for otherwise to suggest that we are not tracking against and expecting to deliver our remediation plan.

Matthew Dodds - Citigroup

Is there any last question in the audience? All right. We’ll cut that. Mark, thank you very much.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Hill-Rom's Management Presents at 2013 Citi Global Healthcare Conference (Transcript)
This Transcript
All Transcripts